By Justine Irish D. Tabile, Senior Reporter
PHILIPPINE FACTORY activity contracted for the first time in five months in April amid a pointy decline in latest orders, S&P Global said on Monday.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) slumped to 48.3, a reversal from 51.3 in March, reflecting a “moderate deterioration in operating conditions.”
A PMI reading below 50 shows a deterioration in operating conditions from the previous month, while a reading above 50 signals an improvement.
“The Philippine manufacturing sector began the second quarter of 2026 with a renewed worsening of operating conditions because the headline index fell below the neutral 50 reading for the primary time in five months,” Maryam Baluch, an economist at S&P Global Market Intelligence, said in a report.
April marked the primary contraction in PMI because the 47.4 reading in November 2025.
Except for the Philippines, Indonesia (49.1) was the one other Association of Southeast Asian Nations (ASEAN) member that saw a contraction in PMI in April.
In contrast, Malaysia had the very best PMI (51.6), followed by Myanmar (50.9) and Vietnam (50.5).
For the Philippines, S&P Global said latest orders declined rapidly, while production stalled.
In keeping with S&P, the decline in latest orders was the steepest since August 2021.
“Total latest sales were also weighed down by a deteriorating export market demand picture,” said Ms. Baluch.
Philippine manufacturers reported that latest export orders fell at a “notably accelerated and rapid pace” in April, as closed trade routes resulted in a pause in shipments and created hesitancy amongst customers.
S&P Global said this was the steepest decline in latest export orders since mid-2020, at the peak of the pandemic lockdowns.
“Total latest sales were also weighed down by a deteriorating export market demand picture,” Ms. Baluch said.
Manufacturing firms also saw sluggish production levels in April.
“Production levels stagnated, and firms made cuts to buying and hiring activity as they grappled with high costs, often said to be feeding through from the war within the Middle East,” Ms. Baluch added.
Input price inflation accelerated to its fastest pace since December 2022, which firms attributed to higher energy and shipping costs linked to the war within the Middle East.
“Costs were largely passed on to clients through a pointy and stronger rise in factory gate charges. The speed of selling price inflation was the quickest in 41 months,” S&P Global said.
Manufacturers saw a drop in buying activity for a second month in a row in April, as they turned to inventories to satisfy production requirements. This led to the largest reduction in pre-production inventories since 2020.
S&P Global noted that rising costs drove manufacturers to slash staffing numbers. This marked the primary decline in hiring activity this yr.
Despite a drop in employment, Philippine firms reported lower backlogs amid a pointy reduction in latest orders.
“Taking a look at supply chains, April marked an additional deterioration in vendor performance. Average lead times for inputs lengthened solidly. Longer delivery times were widely linked to the war within the Middle East,” S&P Global said.
Despite the challenges, manufacturers reported stronger business confidence, underpinned by hopes of a growing client base and improving demand.
“Manufacturing firms within the Philippines expect to shake off current woes, as confidence for the yr ahead rose to a 17-month high,” Ms. Baluch said.
Francisco Cid L. Terosa, an associate professor and former dean of the School of Economics of the University of Asia and the Pacific, said that the manufacturing decline in April reflects the opposed impact of the Middle East conflict.
“The flow of key manufacturing inputs like petroleum products and by-products, liquefied natural gas, and the like was clearly disrupted by the continued crisis,” Mr. Terosa said in a Viber message.
“If the conflict persists, I expect the deterioration of the PMI to deepen and the expansion prospects of the manufacturing sector to dim,” he added.